India and Sri Lanka have signed a double tax avoidance agreement (DTAA) aimed at promoting cross-border investment and preventing the evasion of taxes by individuals and companies doing business in both countries. The treaty, which was signed in January 2013, provides relief from double taxation and reduces tax disputes between the two nations.
The DTAA between India and Sri Lanka is designed to eliminate double taxation of income earned by residents of either country. This means that if a resident of India earns income in Sri Lanka, they will not be taxed twice on the same income. Instead, they will only be taxed in the country where the income was earned.
The agreement also provides for the exchange of information between the two countries’ tax authorities. This will help to prevent tax evasion and ensure that individuals and companies are paying the correct amount of tax.
The DTAA applies to various types of income, including dividends, interest, royalties, and capital gains. It also covers taxation of shipping and air transport profits, and provisions for relief from double taxation on income of individuals who are not resident in either country.
The agreement is expected to boost trade and investment between India and Sri Lanka. It will provide greater certainty to businesses and investors in both countries, as they will have a clearer understanding of their tax obligations and can avoid double taxation. This will make it easier for businesses to invest in and expand their operations in both countries.
The DTAA is expected to have a positive impact on the economies of both India and Sri Lanka. It will help to attract foreign investment and promote economic growth, which will create job opportunities and improve living standards. It is also expected to strengthen the relationship between the two countries, as they work together to promote mutual economic interests.
In conclusion, the double tax avoidance agreement between India and Sri Lanka is an important step towards promoting cross-border investment and preventing tax evasion. It provides relief from double taxation and reduces tax disputes, which will make it easier for businesses to invest in both countries. The agreement is expected to have a positive impact on the economies of both India and Sri Lanka and will help to strengthen their relationship.
